Current Trends in Billing, Rejections, and Appeals with Third Party Payers: A Two-Year Review of Over 4,000 Consecutive Plastic Surgery Cases in a University Group Practice SettingAndrew J. Swearingen, BS, Roberto Flores, MD, John J. Coleman, III, MD. Indiana University School of Medicine, Indianapolis, IN, USA.

Purpose:In order to provide plastic surgery care in a university setting it is necessary to work with a variety of third party payers. In many cases, elective reconstructive procedures are preapproved by insurance carriers prior to surgery. In others, the plastic surgeon is called for assistance during the patient’s hospitalization and a bill is submitted to insurance after service is rendered. It has been our observation that there remains a significant rejection rate and delay in reimbursement despite the required use of this preapproval system and clear indications for many of our urgent reconstructions. In this study, we report our institution’s two-year experience with billing, appeals, and rejections with third party payers, including subgroup analyses of Breast, Cleft/Craniofacial, Burn, Hand, and Free Flap reconstruction.Methods:A retrospective analysis of two years of all billing data from eight attending surgeons was performed through the billing office of our plastic surgery division. A software program created by our team identified plastic surgery procedures and extracted the number of surgical encounters, the procedure(s) performed, the number of rejections by payer and by type of procedure, and the number of appeals along with the time to resolution of claims. The software also separated the cases into subgroups including Cleft/Craniofacial, Breast, Hand, Burn, Free Flaps, and Other, based on the CPT codes billed and ICD9 diagnosis codes. The same analysis was performed on these subgroups to identify possible variations in rejections and appeals between different plastic surgical procedures.Results:4,313 cases were billed, comprising 11,117 CPT codes. At least one CPT code was initially denied in 1285 of 4313 cases (29.8%). Analysis of CPT codes revealed initial denial of 3,038 of 11,117 codes (27.3%). In addition, 7,920 (71.2%) partial payments for procedures were allotted by insurance carriers. 10,356 appeals were generated, totaling one appeal for almost every CPT code submitted. Median time to final resolution of appeals was 52 days. Private insurance had a higher CPT denial rate than Medicaid, 22.0% vs. 18.5% (p = 0.00019). Data from the subcategories are shown in Table 1. Data organized by procedure are shown in Table 2.Conclusions:Despite the required use of a preapproval mechanism, a large proportion of plastic surgery procedures are rejected by third-party payers, and many are only partially reimbursed. A significant increase in rejection rate by private insurance vs. Medicaid was found in the total cohort and many of the subgroups. A lengthy and repetitive appeals process is necessary to secure reimbursement. This prolonged appeals process adds significant healthcare cost by the high utilization of manpower solely for the purpose of securing reimbursement. Considering future changes in healthcare compensation, universities, practitioners, and payers should seek greater efficiency in the system.

Table 1 - Subcategory Data

All Cases

Cleft/Craniofacial

Burn

Hand

Breast

Free Flaps

Other

# Cases

4313

708

820

262

579

71

1921

# CPTs billed

11116

1263

3467

576

1463

87

4270

Denials per CPT

----Medicaid

18.5%

16.7%

20.7%

11.2%

14.9%

38.8%

18.3%

----Private

22.0%

24.8%

21.1%

23.1%

28.7%

23.0%

17.9%

p value

0.0002

0.001

0.85

0.004

0.0003

0.10

0.86

CPT Denials/Encounter

0.7

0.4

1.3

0.7

0.8

0.9

1.3

CPTs/Encounter

2.6

1.8

4.2

2.2

2.5

3.2

2.2

Median days to resolve

63

53

87.5

56

72

137

57

Table 2 - Most Common Procedures by Case Type

CPT Code

Procedure

Number Performed

Denial Rate

Cleft/Craniofacial

42200

PALATOPLASTY/CLEFT PALATE

159

7.5%

Burn

15002

SURGICAL PREP OF RECIPIENT SITE, FIRST 100 SQ CM OR 1% OF BODY AREA

583

31.4%

Hand

26951

AMPUTATION, FINGER OR THUMB, PRIMARY OR SECONDARY, ANY JOINT OR PHALANX, SINGLE